CA To Lay Off 1,200 Employees, Consolidate Development Operations

CA Technologies will lay off approximately 1,200 employees worldwide and consolidate its development operations after the company reported disappointing fourth-quarter financial results.

The company expects to carry out the majority of the cutbacks by the end of the current quarter in June and will take a charge of approximately $150 million in fiscal 2014 to cover those costs.

CA reported revenue of $1.15 billion for the fourth quarter ended March 31, a decline of 3 percent from $1.18 billion in the same period one year earlier. Income from continuing operations was $242 million, up 15 percent from $211 million last year.

For all of fiscal 2013, CA reported revenue of $4.6 billion, down 4 percent from $4.8 billion in fiscal 2012. Income from continuing operations for the year was $955 million, up 2 percent from the previous fiscal year.

"The traditional ways we've looked at systems, data, applications and security are being challenged by disruptive technologies like mobility, cloud, SaaS and big data," CEO Mike Gregoire said in a statement.

"Businesses have higher expectations from IT, demanding far greater speed and agility and anytime, anywhere secure connectivity. These are areas where CA has expertise and can help. To better meet this customer demand, we announced a plan and corresponding charge of approximately $150 million for fiscal year 2014 that will enable us to rebalance our resources to drive greater innovation and collaboration in product development and greater efficiency and better sales execution.

Gregoire, previously CEO at Taleo, was named CA's new CEO late last year, taking over from William McCracken who retired in March after a transition period.

CA did not provide details about where the layoffs would occur. The company said it would consolidate some 80 development sites into about 40 "centralized development hubs" to spur "collaboration and agile development." It also expected to "backfill a majority of the [laid off] positions" during the next 12 month with "new employees with skills that will enable the company to better focus its resources on priority products and market segments."

The company currently has about 14,000 employees worldwide.

CA also said it would "further streamline its sales structure," but did not offer details.

In a statement, David Bradley, senior vice president of global partners, indicated the cuts don't impact the vendor's channel plans and that "growing our partner network is one of our key growth strategies.

"In our FY14 plan we have made a significant increase in the number of sales people covering partners, and expanded the roles of CA Pre-sales and CA services in enabling partners. We have also made changes in our compensation model for customer account managers to offset loss of commission payments when a sale happens through a partner, and instituted an internal 'hard deck' so that unnamed accounts will be fulfilled through and ultimately managed by a partner," Bradley said.

The company said it expects revenue for fiscal 2014 to be in the range of $4.43 billion to $4.52 billion.